May 2021 Federal Budget – key implications for your super
AvSuper summarises the likely impact of the Federal Budget on your super and your retirement.
We’ve outlined below a summary of the key superannuation related elements of the Budget to help you understand them and any impact they may have on your retirement savings.
While I am a new face to AvSuper, I hold the same view that we’ve always had on the importance and value of keeping you informed about developments and potential changes to super, one of your most significant assets. If you have concerns about how these Budget changes may affect you, you can call us with your questions, or make an appointment with one of our professional Member Advice Consultants to obtain advice on your specific situation.
Chief Executive Officer
Generally the announcements made as part of the Budget will have to pass as legislation before they take effect. Therefore, Budget proposals should not be taken as fact yet, even if a starting date is proposed.
Some Budget proposals have not yet been explained in detail by the Government and industry consultation on draft legislation will be required. The final legislation could therefore be different from what was announced during the Budget and start dates may be changed. As further details become available we will analyse their relevance to AvSuper and report to members as appropriate.
This year’s Federal Budget includes a number of superannuation related changes, although most are adjustments to existing programs rather than introducing anything new or significant changes. While some of these changes may not directly affect you, we welcome any questions.
From 1 July 2022, members aged 60 or older will be able to contribute up to $300,000 from the proceeds of selling the family home. These contributions are separate to other contribution limits but it’s worth remembering there are specific rules associated with this measure.
Currently, this is only available to members aged 65 and above. Our downsizing factsheet covers eligibility and other details.
Minimum superannuation threshold
Currently employers are required to pay superannuation guarantee to eligible employees earning at least $450 in a month. The Budget proposes that there will be no minimum threshold from 1 July 2022, meaning that all eligible employees will receive employer contributions.
The proposed changes will mean that casual and part time workers who currently do not qualify for SG contributions will begin to receive these contributions to build their super savings. Obviously, this requires administrative changes for employers.
Work test changes
Currently, members aged 67 to 74 can only make super contributions if they meet the work test (which involves working at least 40 hours in a month during the financial year). From 1 July 2022, all members under 74 will be able to make non-concessional and salary sacrifice contributions without reference to the work test. Members between 67 and 74, however, will still need to meet the work test for personal deductible contributions.
This will mean it will be simpler for members aged 67 to 74 to make super contributions to their account.
First home super savers scheme (FHSSS)
From 1 July 2022, eligible members will be able to withdraw up to $50,000 (compared to the current $30,000) of personal contributions to use towards buying their first home. Learn more about the FHSSS in our factsheet.
Pension Loans Scheme
The pension loans scheme (as detailed in the AvSuper Retirement Guide) offers a source of income for retirees, using their home as security. The Budget includes a number of adjustments to the PLS, including a No Negative Equity Guarantee and providing access to two lump sum advances per any 12 months.
We hope you find this information useful to understand the changes proposed by the Federal Government and how they might affect you if they become law. As always, we will keep members informed about any changes as things develop or become law, so be sure to watch our website and read our Annual Report.
If you have any queries or wish to discuss your super account in details, please contact our Member Services Team by email, AvChat or calling 1300 128 751.
Email: firstname.lastname@example.org | Local call: 1300 128 751 | www.avsuper.com.au